New Orleans and Jefferson Parish scramble for money to meet corps deadline

Worried about jeopardizing about $1 billion in federal money for drainage projects, New Orleans and Jefferson Parish officials are scrambling to secure $7.7 million by Friday to meet a deadline they say the Army Corps of Engineers announced at the eleventh hour.

View full sizeSusan Poag,The Times-Picayune archiveA worker takes a measurement in the Algiers Outfall Canal while working on the $22 million drainage overhaul of Gen. de Gaulle Drive in June 2010.

The money would pay for relocating utilities during construction of major drainage projects slated to kick off in coming months along South Claiborne and Napoleon avenues in New Orleans and at the Two Mile, Justice and Oil Company canals on Jefferson Parish's West Bank.

Local officials don't dispute that they're on the hook for the payments: about $6.6 million from the Sewerage & Water Board and about $1.1 million from Jefferson Parish. But until recently, they thought the money could be paid over 30 years, as is the case with local matching funds for most other costs associated with the Southeast Louisiana Flood Urban Flood Control program, known as SELA.

The program aims to enhance drainage inside the area's levee protection system; improvements can drive down flood insurance costs.

"Our understanding, along with the New Orleans Sewerage & Water Board, was that the relocation should have been in a 30-year payment. Then all of a sudden, they're telling us, no, we're having to come up with the money up front," said Kazem Alikhani, the Jefferson Parish public works director.

'A bombshell'

New Orleans Deputy Mayor Cedric Grant, who went to Washington last month to lobby on the issue, described the disclosure as "a bombshell," adding that "it has really kind of strained our relationship" with the corps.

Though plans for the projects have been in the works for years, local officials said corps personnel told them in mid-February that they would have to pay up by Friday. The disconnect hinges on varying interpretations of documents that authorize the projects.

The top official at the state agency that serves as the intermediary between local SELA participants and the corps said he thinks "the law is clear that relocations and all real estate costs are eligible to be financed over 30 years."

Garret Graves, chairman of the Louisiana Coastal Protection and Restoration Authority, noted that the corps made its demand for the up-front payments around the same time the engineering agency reprogrammed $60 million from SELA to West Bank levee projects.

He called the timing "curious," an assessment that Grant said he shares.

But rather than continue to argue, Graves said the state is trying to help local governments come up with the money.

What would happen if they can't swing it is unclear. Corps spokesman Rene Poche said in an email message that the agency "will be unable to continue execution of the remaining SELA projects until the relocation funds are provided ... and the potential exists for delays if these funds are not provided in a timely manner."

Graves insisted the money cannot be pilfered by another corps branch because of the emergency nature of the appropriation, which was part of $14.6 billion appropriated by Congress for levee improvements. If anything, the projects would be postponed, he said.

"These funds aren't traditional funds that can just be interchangeable among any of the Corps of Engineers districts," he said. "You can't just take emergency funds and use them on anything."

Local officials anxious

But local officials are anxious.

"If the corps would be forced to delay the bid openings for these projects, that could be a signal to other corps districts that that money could be available," S&WB General Superintendent Joe Becker said.

Becker said the S&WB's pending $6.6 million bill is just the tip of the iceberg. To tap about $800 million in federal money for drainage projects Uptown and in the 9th Ward, the S&WB must cough up another $35 million by 2014, in step with the projects' construction schedules.

The water board can't cover its own recommended maintenance budget this year.

"Nobody wants $800 million worth of SELA projects to walk away ... because we're short $42 million," Becker said. "This kind of money leaving the state would be a disaster."

Grant said the city's 2011 budget cannot support the payments.

Alikhani said Jefferson Parish owes another $2.5 million by January and $4 million more in coming years, adding that he's hopeful the state will provide the money as a grant.

Graves intimated that the option is unlikely.

Recent discussions among the parties have been amicable, with attorneys for the corps, state and local entities cooperating to seek alternatives that might be allowed under the disputed rules.

"I think it would be within (the corps') right to say, 'Send us the check or we'll send the money someplace else.' They are not saying that," Becker said. "We're very optimistic that we're going to find a way to get this done. I'm not sure how yet, but I'm sure that it's going to work."